Leerink Partners Raises Price Target on Ironwood Pharma (IRWD) to $14; Reiterates Market Perform
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Leerink Partners reiterated a Market Perform rating on Ironwood Pharmaceuticals (NASDAQ: IRWD), and raised the price target to $14.00 (from $10.00), following the company's 2Q earnings report. Linzess sales grew to $150.5m, ~2% above forecasts. Underlying sales growth of +34% was driven by 29% Rx volume growth. IRWD will launch Zurampic (gout) in October 2016. Zurampic prevents the reabsorption of uric acid through a mechanism that is complementary to xanthine oxidase inhibitors (XOI) such as allopurinol.
Analyst Jason M. Gerberry commented, "IRWD reported 2Q Linzess sales of ~$151m, slightly above our est. of $147m in a relatively straightforward qtr. Based on 2Q updates – we are now modeling risk adjusted life cycle management (LCM) contribution from colonic release through 2034E, which along with modest upward revisions to our Linzess forecasts in out-years increases our price target to $14/shr (from $10/shr). We are increasing our OpEx spend for 2016E to $321m (from $306m) to reflect increased spend on Zurampic (gout) launch and spend associated with development of a fixed-dose combination Zurampic-allopurinol agent, and our '17-21E OpEx spend by 3-6% for Linzess LCM programs, which offsets some of the upside from the inclusion of risk adjusted colonic release to our model. We remain MP."
Shares of Ironwood Pharmaceuticals closed at $14.16 yesterday.
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